Lisa Gay Love v. Federal National Mortgage Association

IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

March 10, 2015 Session

LISA GAY LOVE v.

FEDERAL NATIONAL MORTGAGE ASSOCIATION, ET AL.

Appeal from the Chancery Court for Knox County

No. 1781833 Michael W. Moyers, Chancellor

No. E2014-01649-COA-R3-CV-FILED-MAY 18, 2015

This appeal arises from a foreclosure on a deed of trust. Lisa Gay Love (“Love”) sued

Federal National Mortgage Association (“FNMA”), SunTrust Mortgage, Inc.

(“SunTrust”), and Self Help Ventures Fund (“Self Help”) (“Defendants,” collectively) in

the Chancery Court for Knox County (“the Trial Court”) alleging that the foreclosure of

her home was wrongful.1 Defendants filed a motion for summary judgment asserting that

Love had defaulted on her mortgage, that SunTrust had exercised its power under the

deed of trust to foreclose, and that FNMA had obtained a final judgment in an earlier

detainer action. Love, in turn, argued that, because FNMA was not named on the deed at

the time of the detainer action, FNMA lacked standing and the detainer judgment is void.

The Trial Court granted Defendants’ motion for summary judgment, holding that

Defendants had established res judicata. Love appeals. We hold that the judgment in the

detainer action is a final judgment, that we will not revisit the issue of FNMA’s standing

in that suit, and that res judicata bars Love’s claims. We affirm the judgment of the Trial

Court.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed;

Case Remanded

D. MICHAEL SWINEY, J., delivered the opinion of the court, in which CHARLES D.

SUSANO, JR., C.J., and THOMAS R. FRIERSON, II, J., joined.

J. Myers Morton, Knoxville, Tennessee, for the appellant, Lisa Gay Love.

J. Matthew Kroplin, Nashville, Tennessee, for the appellees, Federal National Mortgage

Association, SunTrust Mortgage, Inc., and Self Help Ventures Fund.

1

Love also sued Nationwide Trustee Services, Inc. (“Nationwide”). Nationwide later was dismissed

from the suit and is not a party on appeal.

Terry Woods, Knoxville, Tennessee, for amicus curiae Legal Aid of East Tennessee.

OPINION

Background

In 2005, SunTrust loaned Love $86,500.00 to finance her home, where she

lives with her grandchildren. The loan was evidenced by a promissory note and deed of

trust secured by the real property. Love thereafter became disabled and subsequently

defaulted on the loan. In 2009, Love contacted SunTrust’s “loss mitigation” program for

help. Love remained unable to cure the default. Later in 2009, SunTrust appointed

Nationwide as successor trustee under the deed of trust. A foreclosure was scheduled and

postponed, and this procedure carried on for some time.

Eventually, in February 2010, Nationwide, the successor trustee, conducted

a foreclosure sale. FNMA purchased the property. Due apparently to a mistake, Self

Help rather than FNMA was listed on the deed as the purchaser. In March 2010, FNMA

filed a detainer warrant against Love in Knox County General Sessions Court. In April

2010, the General Sessions Court entered an agreed judgment awarding possession of the

property to FNMA, notwithstanding the error with the deed. Love did not appeal. Self

Help went on to execute a quitclaim deed to FNMA.

In July 2010, Love filed the present case in the Trial Court. Love asserted

that SunTrust misled her into believing she could avoid foreclosure. Love also alleged

that FNMA had lacked standing to bring the detainer action in General Sessions Court

because it was not the title holder due to a mistake made during transfer in the foreclosure

sale. By consent of the parties, Nationwide later was dismissed as a defendant.

Defendants jointly filed a motion for summary judgment. Among other things,

Defendants raised the affirmative defense of res judicata. According to Defendants:

[E]ven if issues of fact had ever existed regarding the validity of the

foreclosure, they are now moot by the fact that FNMA obtained judgment

in a detainer warrant proceeding following the foreclosure and that

judgment is res judicata as to the validity of the foreclosure, and bars a

separate action to challenge it.

Love, in turn, argued that FNMA lacked legal standing to pursue the detainer action, that

Self Help was the real purchaser, and that the General Sessions Court therefore lacked

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subject matter jurisdiction to decide the case. The Trial Court granted Defendants’

motion for summary judgment in an order which we now quote from, in part:

Plaintiff’s reasoning is as follows. Because defendant FNMA was

not listed as the owner on the deed of trust assigned at the April 6

foreclosure sale, it lacked standing to bring the detainer action in General

Sessions Court. And because FNMA lacked standing to bring the suit in

General Sessions Court, that court lacked subject matter jurisdiction to

decide the matter. As a result, the final judgment of the General Sessions

Court is void and cannot be used as a basis to assert the defense of res

judicata in this subsequent case.

The recent case of Boyce v. LPP Mortgage Ltd., 2013 Tenn. App.

LEXIS 748 (Tenn. Ct. App., November 20, 2013) is instructive in the

present case because the facts are virtually identical to the present set of

facts. In Boyce, the defendant had previously filed a detainer warrant in the

General Sessions Court to repossess property from the plaintiffs on which

the plaintiffs had defaulted. During the detainer hearing, the plaintiffs did

indeed raise the defense that the defendant was not the rightful titleholder to

the property and should not be allowed to bring the action for repossession

of the property. The defendant argued in front of the General Sessions

Court that the court had no authority to review the state of title, and the

General Sessions Court agreed with defendant’s argument. Therefore, the

General Sessions Court awarded defendant possession of the property.

Thereafter, the plaintiffs did not properly appeal the decision of the

General Sessions Court to the Circuit Court for judicial review, and the

decision of the General Sessions Court became final. Instead, the plaintiffs

filed a separate action in the Chancery Court to determine whether the

defendant was the proper titleholder. The Chancery Court determined that

once the judgment of the General Sessions Court became final, the doctrine

of res judicata barred the plaintiffs from attempting to raise the issue of title

a second time.

There is one key difference between the situation in Boyce and the

present case: the plaintiffs in Boyce raised the issue of title in their initial

case. In the present case, plaintiff Love did not raise the issue of title or

standing in the detainer hearing before the General Sessions Court.

However, this difference in fact does not render the doctrine of res judicata

inapplicable . . . There is no doubt that the issue of standing and title could

have been litigated in the detainer action before the General Sessions Court.

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Boyce is clear on this point. The plaintiff had an opportunity to properly

appeal the decision of the General Sessions Court to the Circuit Court for

review. The plaintiff did not do so. Thereafter, the judgment of the

General Sessions Court became final. Issues arising out of claims litigated

or that could have been litigated in the General Sessions case, from the

moment the judgment became final, were barred by the doctrine of res

judicata from being litigated a second time . . . .

***

Plaintiff has filed a new lawsuit in another court, but, in essence, plaintiff is

attempting to appeal the decision of the General Sessions Court in a

separate action in Chancery. Such an appeal is improper. . . .

***

Accordingly, the Court concludes that the defendants have

conclusively established the affirmative defense of res judicata . . . .

(Citations omitted). The Trial Court also granted summary judgment to Defendants

regarding Love’s Tennessee Consumer Protection Act claims. Love filed a motion to

alter or amend judgment, which was denied. In the meantime, the Trial Court enjoined

Defendants from evicting Love from her home pending appeal of the Trial Court’s

decision. Love timely filed an appeal with this Court.

Discussion

We restate the issue Love raises on appeal as the following issues: 1)

whether the Trial Court erred in holding that Love’s claims are barred by res judicata; 2)

whether the Trial Court erred by holding that res judicata applied when an injunction was

in effect; and, 3) whether a consent order entered in proceedings before the Board of

Governors of the Federal Reserve System regarding certain of SunTrust’s alleged

practices has any bearing in the present case.

Our Supreme Court reiterated the standard of review in summary judgment

cases as follows:

The scope of review of a grant of summary judgment is well

established. Because our inquiry involves a question of law, no

presumption of correctness attaches to the judgment, and our task is to

review the record to determine whether the requirements of Rule 56 of the

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Tennessee Rules of Civil Procedure have been satisfied. Hunter v. Brown,

955 S.W.2d 49, 50-51 (Tenn. 1997); Cowden v. Sovran Bank/Cent. S., 816

S.W.2d 741, 744 (Tenn. 1991).

A summary judgment may be granted only when there is no genuine

issue of material fact and the moving party is entitled to judgment as a

matter of law. Tenn. R. Civ. P. 56.04; Byrd v. Hall, 847 S.W.2d 208, 214

(Tenn. 1993). The party seeking the summary judgment has the ultimate

burden of persuasion “that there are no disputed, material facts creating a

genuine issue for trial . . . and that he is entitled to judgment as a matter of

law.” Id. at 215. If that motion is properly supported, the burden to

establish a genuine issue of material fact shifts to the non-moving party. In

order to shift the burden, the movant must either affirmatively negate an

essential element of the nonmovant’s claim or demonstrate that the

nonmoving party cannot establish an essential element of his case. Id. at

215 n. 5; Hannan v. Alltel Publ’g Co., 270 S.W.3d 1, 8-9 (Tenn. 2008).

“[C]onclusory assertion[s]” are not sufficient to shift the burden to the non-

moving party. Byrd, 847 S.W.2d at 215; see also Blanchard v. Kellum, 975

S.W.2d 522, 525 (Tenn. 1998). Our state does not apply the federal

standard for summary judgment. The standard established in McCarley v.

West Quality Food Service, 960 S.W.2d 585, 588 (Tenn. 1998), sets out, in

the words of one authority, “a reasonable, predictable summary judgment

jurisprudence for our state.” Judy M. Cornett, The Legacy of Byrd v. Hall:

Gossiping About Summary Judgment in Tennessee, 69 Tenn. L. Rev. 175,

220 (2001).

Courts must view the evidence and all reasonable inferences

therefrom in the light most favorable to the non-moving party. Robinson v.

Omer, 952 S.W.2d 423, 426 (Tenn. 1997). A grant of summary judgment

is appropriate only when the facts and the reasonable inferences from those

facts would permit a reasonable person to reach only one conclusion.

Staples v. CBL & Assocs., Inc., 15 S.W.3d 83, 89 (Tenn. 2000). In making

that assessment, this Court must discard all countervailing evidence. Byrd,

847 S.W.2d at 210-11. Recently, this Court confirmed these principles in

Hannan.

Giggers v. Memphis Housing Authority, 277 S.W.3d 359, 363-64 (Tenn. 2009).

We first address whether the Trial Court erred in holding that Love’s claims

are barred by res judicata. Love argues on appeal that FNMA cannot invoke res judicata

when FNMA lacked color of title during the detainer proceedings. FNMA only corrected

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this error after the detainer proceedings. Defendants argue in response that Love could

have raised the issue of standing in the detainer proceedings and cannot now revisit the

issue of standing in a separate lawsuit. This Court has discussed extensively res judicata

in the context of detainer actions as follows:

“The doctrine of res judicata or claim preclusion bars a second suit

between the same parties or their privies on the same claim with respect to

all issues which were, or could have been, litigated in the former suit.”

Jackson v. Smith, 387 S.W.3d 486, 491 (Tenn. 2012). The purposes of the

res judicata doctrine are “to promote finality in litigation, prevent

inconsistent or contradictory judgments, conserve legal resources, and

protect litigants from the cost and vexation of multiple lawsuits.” Creech v.

Addington, 281 S.W.3d 363, 376 (Tenn. 2009). The doctrine is grounded in

the public policy principle that “litigation should be determined with

reasonable expedition, and not protracted through inattention and lack of

diligence on the part of litigants or their counsel.” Id. (quoting Jordan v.

Johns, 79 S.W.2d 798, 802 (Tenn. 1935)). As the Supreme Court has

recently instructed,

The party asserting a defense predicated on res

judicata or claim preclusion must demonstrate (1) that the

underlying judgment was rendered by a court of competent

jurisdiction, (2) that the same parties or their privies were

involved in both suits, (3) that the same claim or cause of

action was asserted in both suits, and (4) that the underlying

judgment was final and on the merits.

Jackson, 387 S.W.3d at 491.

The issue presented here has been recently addressed and decided by

this court in the case of Davis v. Williams, No. E2010-01139-COA-R3-CV,

2011 WL 335069 (Tenn. Ct. App. E.S., filed Jan. 31, 2011). In Davis, a

case involving a practically identical fact pattern, we addressed “whether

the judgment rendered by the general sessions court in the unlawful

detainer action can be given res judicata effect to preclude the present

action when the fraud alleged in this present action could only have been

raised in the general sessions court as a defense to possession and not as an

original claim to set aside the foreclosure sale.” Id. at *2 (italics in

original). We stated the following in Davis:

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The Sellers maintain ... that since wrongful or fraudulent

foreclosure could have been raised as a defense in the

unlawful detainer action, but was not, it cannot now be the

basis of a new action. The Buyers concede that they “could

have asserted a defense of wrongful foreclosure; however, as

in [ CitiFinancial Mortgage Company, Inc. v. Beasley, No.

W2006-00386-COA-R3-CV, 2007 WL 77289 (Tenn. Ct.

App. W.S., filed Jan. 11, 2007) ], [the Buyers] did not.” The

Buyers maintain that even though the general sessions court

could have denied the Sellers possession based on the defense

of wrongful possession, its inability to set aside the

foreclosure and vest title in them rather than the Sellers

means that its judgment does not have preclusive effect.

We disagree with the Buyers. The courts of this state have

consistently applied the doctrine of res judicata “to protect

individuals from the burden of litigating multiple lawsuits, to

promote judicial economy, and to promote the policy favoring

reliance on final judgments by minimizing the possibility of

inconsistent decisions.” Gerber v. Holcomb, 219 S.W.3d

914, 918 (Tenn. Ct. App. 2006).

Id. at *2 (italics in original). We held that “[t]here is absolutely no doubt

that wrongful foreclosure can be raised as an affirmative defense to an

unlawful detainer action brought by the purchaser of property in

foreclosure.” Id. at *3 (citing Beasley, 2007 WL 77289 at *6-7; Fed. Nat'l

Mortgage Ass'n v. Robilio, No. W2007-01758-COA-R3-CV, 2008 WL

2502114 at *5 (Tenn. Ct. App. W.S., filed June 24, 2008)). We concluded

that “[i]n failing to raise these matters concerning fraud in the foreclosure

which could have been litigated and decided as an incident to or essentially

connected with the subject matter of the prior litigation, the Buyers

forfeited their opportunity to assert fraud under the doctrine of res

judicata.” Davis, 2011 WL 335069 at *3-4 (quoting Gerber, 219 S.W.3d at

918) (italics in original; brackets in original omitted). Our rationale for this

conclusion was as follows:

It is a fundamental principle of jurisprudence that material

facts or questions, which were in issue in a former action, and

were there admitted or judicially determined, are conclusively

settled by a judgment rendered therein, and that such facts or

questions becomes res judicata and may not again be litigated

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in a subsequent action between the same parties or their

privies, regardless of the form the issue may take in the

subsequent action whether the subsequent action involves the

same or a different form or proceedings, or whether the

second action is upon the same or a different cause of action,

subject matter, claim, or demand, as the earlier action. In

such cases, it is also immaterial that the two actions are based

on different grounds, or tried on different theories, or

instituted for different purposes, and seek different relief....

Id. at *3 (quoting Gerber, 219 S.W.3d at 919). We recently reiterated and

applied these principles in CitiMortgage, Inc. v. Drake, No. E2012-00722-

COA-R3-CV, 2013 WL 655914, at *9 (Tenn. Ct. App. E.S., filed Feb. 21,

2013), another case involving an unsuccessful challenge to a foreclosure

following an unlawful detainer action in general sessions court.

In the present case, the Fosters argue that because the general

sessions court does not have jurisdiction to entertain the question of title

acquired through foreclosure, they should not be barred from later

challenging the foreclosure in a second, separate action. We considered and

rejected the same argument in Davis:

The Buyers argue about the general sessions court’s

jurisdiction, but, as we have illustrated above, it had subject

matter jurisdiction of the detainer action. It was competent in

the detainer action to consider title as a challenge to the

Sellers’ right to possession. The Buyers understandably

argue that the cause of action in the present action is not the

same as in the detainer action. However, the Tennessee

Supreme Court has recently redefined the term “cause of

action” broad[ly] enough to connect the detainer action and

the present action. There can be no doubt that the detainer

action and the present action both arose out of the same

transaction or series of connected transactions.

Davis, 2011 WL 335069, at *4 (citation omitted). Similarly, in this case,

the unlawful detainer action filed by FNMA and decided by the general

sessions court—an action that could have been appealed and heard de novo

by the circuit court, but was not—and this second action, including all

claims asserted by the Fosters, each of which is based on or pertaining to

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the alleged wrongful foreclosure, arose out of the same series of connected

transactions.

Foster v. Federal Nat. Mortg. Ass’n, No. E2012-02346-COA-R3-CV, 2013 WL

3961193, at **2-4 (Tenn. Ct. App. July 31, 2013), no appl. perm. appeal filed.

It is therefore clear from the relevant case law that the doctrine of res

judicata may serve to preclude a challenge to foreclosure when a final judgment in a

previous adjudication of that same foreclosure has been rendered in general sessions

court. Nevertheless, Love argues that this case is different because of FNMA’s lack of

title during the detainer proceedings. We previously have discussed the issue of standing

as it relates to res judicata:

Barker Building and Travelers attempt to circumvent any res

judicata effect of the second lawsuit by claiming they really should not

have filed the second lawsuit because they lacked standing to do so until

Smith Mechanical’s lien was satisfied via the Performance Bond. They

make this argument even though they previously admitted, and quite

properly so, that the Trial Court in the second lawsuit had subject matter

jurisdiction and there otherwise was no barrier to the Trial Court’s granting

any type of relief requested. We do not believe it appropriate to disregard

the res judicata effect of a final judgment on the merits because years later

the plaintiffs in that action now claim that they really should not have filed

that lawsuit to begin with. The short answer to that argument is that they

did, and an alleged lack of standing by the plaintiffs is not a proper basis

upon which to allow those same plaintiffs later to challenge the validity of

the second lawsuit. We again note that to the extent the second lawsuit

should not have been filed as a separate lawsuit, Barker Building and

Travelers are responsible for that error and any attendant effects arising

therefrom.

Smith Mechanical Contractors, Inc. v. Premier Hotel Development Group, 210 S.W.3d

557, 567-68 (Tenn. Ct. App. 2006).

While the specific scenario in Smith Mechanical Contractors, Inc. is

distinguishable from the present case, we believe the reasoning is sound. In this case,

there was a final judgment from the General Sessions Court entered in favor of FNMA

against Love. The four elements of res judicata are met: 1) a court of competent

jurisdiction, the Knox County General Sessions Court, rendered a final judgment; 2) the

same parties are involved; 3) the same cause of action exists; and 4) the detainer

judgment was final and on the merits. We decline to revisit the issue of FNMA’s

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standing in this separate action, or to carve out in this opinion a special exception to res

judicata in foreclosure cases. We understand that pro se litigants face challenges in

navigating general sessions courts. Nevertheless, the rulings in Foster and other similar

cases reflect the importance placed on the finality of judgments. We affirm the Trial

Court’s holding that res judicata bars Love’s claims.

We next address whether the Trial Court erred by holding that res judicata

applied when a temporary injunction was in effect. The injunction referred to by Love is

that which restrained FNMA temporarily from executing its writ of possession. Love

cites Tennessee law supporting the proposition that enjoined judgments may not serve as

the basis for res judicata. This Court has stated the following concerning injunctions and

res judicata:

There are cases, such as the present case, wherein it is evident that

the former judgment was rendered without intent that it be a final

adjudication, where the former judgment has been effectively suspended by

injunction, and where the blind application of the doctrine would

effectively deprive a litigant of a just opportunity to present his grievances.

In such cases, the court is justified in declining to apply the doctrine of res

judicata.

Batey v. D. H. Overmyer Warehouse Co., 446 S.W.2d 686, 690 (Tenn. Ct. App. 1969).

We, however, disagree with Love on the applicability of Batey. In the

present case, it cannot be said that the judgment in the detainer action was “effectively

suspended.” The judgment was final and on the merits, notwithstanding an injunction

merely to postpone eviction of Love temporarily. There is no indication in the record that

the judgment in the detainer action was intended to be non-final. Additionally, despite

the challenges ordinary litigants like Love may face in general sessions court, Love did

have the opportunity to present her grievances. Given this, we hold that the injunction

does not preclude a holding of res judicata.

The final issue we address is whether a consent order entered in

proceedings before the Board of Governors of the Federal Reserve System regarding

certain of SunTrust’s alleged practices has any bearing in the present case. As best we

can determine, this consent order reflects efforts by SunTrust to take steps in settlement

of claims brought by the Board of Governors. We fail to see how this consent order has

any particular relevance in the appeal before us. Therefore, insofar as this issue purports

to assert any error by the Trial Court or any basis on which to modify its judgment, we

find none.

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In summary, we find and hold that no genuine issues of material fact exist

to preclude summary judgment in this case. Defendants successfully established res

judicata based upon the final judgment in the detainer proceedings before the General

Sessions Court. FNMA’s alleged lack of standing may not be raised tardily now in an

attempt to nullify that final judgment. We affirm the judgment of the Trial Court in its

entirety.

Conclusion

The judgment of the Trial Court is affirmed, and this cause is remanded to

the Trial Court for collection of the costs below. The costs on appeal are assessed against

the Appellant, Lisa Gay Love, and her surety, if any.

_________________________________

D. MICHAEL SWINEY, JUDGE

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